Riley won't recommend expanding stimulus unemployment program

Associated PressAlabama Gov. Bob Riley arrives at the White House to attend a dinner hosted by President Obama, Sunday, Feb. 22, 2009 in Washington. The National Governors Association met in the capital this weekend.

Gov. Bob Riley said this afternoon that Alabama should not expand its unemployment compensation program in order to qualify for an extra $66 million in federal economic stimulus funds.

The decision means thousands of out-of-work Alabamians who may have qualified for the expanded benefits, such as people who worked part-time, will continue to be blocked from collecting unemployment.

Riley, who was among the governors meeting with President Barack Obama this morning , said decisions about who is eligible for unemployment benefits are up to the Alabama Legislature, not the federal government.

"I'm not going to recommend to legislators that they change state law in order for Alabama to receive this portion of the federal stimulus," Riley said in a prepared statement upon his return to Alabama.

"We have a team of experts carefully going over the federal stimulus law line-by-line so we make sure Alabamians benefit from it as much as possible. But we've also uncovered a provision that I believe would harm our state's recovery. It is a federal mandate that would force Alabama to pass a tax increase on jobs of $17 million a year. While the stimulus money will one day vanish, this tax increase would never go away. It would apply to all employers, including small businesses, and potentially even to employees when the federal stimulus funds run out in about four years.

"Increasing taxes is not my idea of stimulating the economy. In fact, this provision would raise taxes on jobs at a time when we need to create jobs.

"Congress has tucked this job-killing tax increase inside the stimulus and that's something Alabama should not be forced by the federal government to accept. I'm not going to recommend to legislators that they change state law in order for Alabama to receive this portion of the federal stimulus.

"Several other governors, Republicans and Democrats, are voicing these same concerns about this part of the stimulus and it's likely that several states will refuse to go along with this tax increase. Today in a meeting with the nation's governors, President Obama acknowledged our concerns over this issue are 'legitimate' so I'm hoping his administration will work with the states to change it."